Greenland: Sub-surface and Self-government

After almost thirty years of Home Rule in Greenland, political aspirations for increased self-determina-tion may soon be within reach, with the likely introduction of self-government in Greenland in 2009. The referendum on self-government will take place on November 25th 2008 and represents the outcome of four years of work in the Greenlandic-Danish self-government commission.

What is below the surface? Thus far no oil or gas has been discovered on the continental shelf of Greenland.  Photo: Rasmus Ole Rasmussen

What is below the surface? Thus far no oil or gas has been discovered on the continental shelf of Greenland. Photo: Rasmus Ole Rasmussen

The main task of the commission has been to draw up a bill on self-government for Greenland and to come up with recommendations on how Greenland can take over new areas of authority within the Danish Kingdom. One area of special interest has been the question of the right to the Greenlandic subsurface.

The work of the commission has been based on the notion that self-government for Greenland will, as far as possible, be based on a self-sustaining economy. Today some 60% of Greenland's GNP is still derived from the yearly economic transfer (block grant) from Denmark, of just about 3.2 billion DKK, while the balance comes from local taxes. To reduce economic dependency on Denmark, the commission recommended that Green-land's self-government will be given the right to exploit the Greenlandic sub-surface. Greenland's right to income derived from sub-surface resources is a key element in the economic model supporting self-government proposed by the commission, (see below):

There is no doubt that the Greenlandic subsurface will play an important role in the future regional development of Greenland, with its great mining prospects and promising oil industry potential. Within the next five years up to five mines will open, expected to create almost 1500 jobs. If the market prices for iron, gold, zinc, zircon, ruby and diamonds remain buoyant, another 10-15 mines are likely to be established within the next two-three decades. In addition, new discoveries of sub-surface resources are likely to be made as the ice cape withdraws due to climate change.

Sub-surface resources in Greenland are currently administered via a joint legislative process involving both Greenland and Denmark. Hierarchically, Danish law is superior to legislation produced by the Greenland self-government thus the exploitation of sub-surface resources is afforded a special position within the Home Rule legal framework. In practice this means that all activities relating to sub-surface resource exploitation remain subject to a special law and thus are dealt with under separate environmental legislation, requirements, traffic rules, etc.

As such, there are no legal requirements in the joint legislation process to involve other Ministries and institutions of the Home Rule government through e.g. hearing processes for the investigation of exploitation plans. From a physical planning perspective this has led the persuite of sometimes uncoordinated and conflicting interests in respect of land-use and resource utilisation. With the future scenarios of mushrooming activities in the mining sector, there is an ever increasing need for coordinated and pro-active physical planning to ensure sustainable regional development.

A major future challenge for the Greenland self-government is therefore the development of Greenlandic legislation dealing with the law on sub-surface resources, ensuring increased cooperation among the Self-Government Ministries and the involvement of stakeholders at various levels. This will, however, mean that Greenland will have to look beyond the goals of mere economic independence from Denmark and follow a more holistic approach in respect of the question of sub-surface resources.

The views in this article are the author's alone and do not necessarily reflect the views of the Greenland Home Rule Government.

By Freia Lund Sørensen
Spatial Planning
Greenland Home Rule

"Grønland får ret til selvstændig-hed", Sermitsiaq, 17. april 2008
Grønlandsk-dansk selvstyre-komminssions betænkning om selvstyre i Grønland, 2008

Economic principles for Greenland Self-government:

1. The Danish economic transfer (block grant) continues unchanged at the 2007-level (3.2 billion DKK regulated according to development in price and salary indexes).

2. Greenland will by its own means finance all new fields of responsibilities taken over from the Danish State.

3. Income generated from sub-surface resource activities will be allocated to the Greenland self-government.

4. The level of fiscal transfer from the Danish State will be reduced by an amount corresponding to half of the income earnings from sub-surface resource exploitation, exceeding 75 million DKK.

5. The Danish State and the Greenland self-government will cooperate on all issues related to sub-surface resources during the first five year period.

6. When the size of the Danish fiscal transfer has been reduced to 0 (zero) DKK negotiations for independence will begin. The negotiations will include the question of income earning division from resource extraction of the Greenlandic subsurface as well as the question of the resumption of fiscal transfers from the Danish State to the Greenland self-government.

Oil explorations in Greenland

No oil has yet been found in Greenland though expectations remain high due to the presence of source rocks (from the Neo Jurassic period), as well as exposed sandstone and shale which usually provides good reservoirs for oil. After disappointing results from five exploration wells drilled in the 1970s interest in exploration has again intensified since the beginning of the 1990s.

Companies exploring:
Disko West: Tender 2006 & 2007
Block 1 (Sigguk): Cairn Energy PLC (87.5%) and NUNAOIL A/S (12.5%)
Block 2 (Sikilinge): -
Block 3 (Eqqua): Cairn Energy PLC (87.5%) and NUNAOIL A/S (12.5%)
Block 4 (Puilasoq): Exxon (29.17%), Chevron (29.17%), DONG (29.17%)
and NUNAOIL A/S (12.5%)
Block 5 (Kangerluk): Husky (87.5%) and NUNAOIL A/S (12.5%).
Block 6 (Orsivik): Exxonmobil (43.75%), Husky (43.75%)
and NUNAOIL A/S (12.5%).
Block 7 (Ikermiu): Husky (87.5%) and NUNAOIL A/S (12.5%).
Block 8 (Naternaq): PA Resources (87.5%) and NUNAOIL A/S (12.5%).

( %) = License share
Open Door area: South west Greenland (south of 630 N) and Jameson Land in East Greenland:
Cairn Energy PLC and NUNAOIL A/S

KANUMAS preference area: North-east Greenland:

Estimated production: 31 billion drums (oil equivalents) in North-east Greenland (survey conducted by USGS).
Potential round of tenders: 2010

KANUMAS preference area: North-west Greenland:
Potential round of tenders: 2012 and 2013

Offshore Nuuk:
Atammik: EnCana orporation (47.5%), Capricorn Atammik Ltd. (40%) and NUNAOIL A/S (12.5%)
Lady Franklin: EnCana orporation (47.5%), Capricorn Lady Franklin (40%) and NUNAOIL A/S (12.5%)

Exploration wells 1970s:
In the 1970s five offshore exploration wells were drilled, the results however were very disappointing.
Exploration wells:
Hellefisk-1 (off-shore), Ikermiut-1 (off-shore), Kangamiut-1 (off-shore)
Nukik-1 (off-shore), Nukik-2 (off-shore), Qulleq-1 (off-shore),
GRO-3 (on-shore)

Source: Bureau of Minerals and Petroleum:

Mines and companies in Greenland

Existing mines:

Nalunaq Gold Mine A/S (Canada), Established in 2003, Numbers of employees: 130, Production 2006: 108,000 tons raw material
(16-25 g gold/tons raw material), Production 2007: 137,000 tons raw material

Seqi Olivine A/S (Minelco A/S) (Sweden)
Established in 2005, Numbers of employees: 30-40, Production 2007: 620,000 tons raw olivine. Expected production 2008: 450,000 tons raw olivine

Planned mines:

'Black-angel' Lead and Zinc-mine, Angus and Ross Plc. Earliest re-start of production: 2009
Expected numbers of employees: 100
Preliminary production period: 15 years

International Molybdenum Plc.
Earliest start of production: 2012
Expected numbers of employees: 500
Estimation of resource: 217 million tons raw material. Expected production: 50,000 tons/day in 15-20 years.

True North Gems, Ruby-mine
Earliest start of production: 2009/2010
Expected numbers of employees: 40

Rimbal Pty. (Australia), Eudialyt-mine
Earliest start of production: 2010/2011
Expected: numbers of employees: 80
Estimation of resource: 2.95 billion tons raw material
Expected production: 1 million tons raw material/year.

Hudson Resources Inc., Diamond-mine
Earliest start of production: 2011
Expected numbers of employees: 500

Potential mines

A number of exploration licenses have been granted in respect of various minerals around Greenland and if the market prices for metals, ruby and diamonds in particular continue to increase there is potential for the further establishment of new mines.

Source: The Geological Survey of Denmark and Greenland – GEUS: